Tuesday, 30 June 2015

Sensex recovers amid global fall on Greece woes; HUL up 2%


After a bloodbath, the market managed to cut losses in the last couple of hours of trade Monday led by short covering in FMCG and private banking & financials stocks. Investors remained cautious ahead of deadline (June 30) for repayment of euro 1.6 billion debt by Greece to its creditors.

After initial bloodbath triggered by fears of Greek default, the market managed to cut losses in the last couple of hours of trade Monday led by short covering in FMCG and private banking & financials stocks. Investors remained cautious ahead of deadline (June 30) for repayment of euro 1.6 billion debt by Greece to its creditors.

The 30-share BSE Sensex fell more than 600 points intraday due to panic selling, before closing at 27645.15, down 166.69 points. The 50-share NSE Nifty dropped 62.70 points to close at 8318.40 after hitting an intraday low of 8195.65.

Weekend announcement of referendum by Greece PM Alexis Tsipras has created uncertainty globally. After a failure to strike a deal with international lenders to secure more funding, the debt-stricken country also introduced capital controls and said it will keep its banks shut this week.

If the Greece does not pay loan by June 30, then it will be declared to be in a default. It may also have to leave the euro zone. The street looked more worried about the contagion effect on other countries like Portugal, Spain and Italy. European Central Bank today has frozen funding to the Greece that owes around euro 240 billion to European Commission, European Central Bank and IMF

European markets like France’s CAC and Germany’s DAX plunged nearly 3.5 percent. Britain’s FTSE was down 1.7 percent (at 16 hours IST). In Asia, Shanghai fell 3.3 percent despite Chinese central bank unveiled it's fourth easing package since November. Hang Seng and Nikkei dropped nearly 3 percent. .

Experts believe that Greece crisis may not have much impact on India and see some bit of volatility ahead.

“Markets will witness little lower volatility than peers as we are least impacted from the unfolding events in Greece and EU. Since Greece issue is well known for some time, it is unlikely to cause as much correction as the 2008 Global Crisis,” said Nilesh Shah, MD at Kotak Mutual Fund.

According to him, equity markets while correcting in line with peers today will be more impacted by how monsoon behaves in July, how monsoon session of parliament is able to legislate bills like GST and Land Acquisition and how June 15 quarterly results pan out.

The currency market, too, took cues from the Greek crisis as the rupee weakened against the dollar, down 20 paise to 63.84/$, in-line with Asian currencies while the 10-year government bond fell to the lowest level since June 16.

Bank Nifty fell nearly 3 percent intraday, before closing down 0.7 percent. State Bank of India lost 2 percent. Axis Bank and HDFC Bank declined more than half a percent while ICICI Bank closed flat with positive bias. Housing finance company HDFC gained 0.3 percent.

Technology stocks also saw selling pressure after Tech Mahindra issued revenue warning for Q1FY16, saying seasonally weak mobility business will be a drag on Q1 revenues & EBITDA and H1 B visa costs will be another drag on margins. Tech Mahindra, which is the third company issuing Q1 warning after Persistent and KPIT Technologies, fell more than 7 percent. Infosys was down 1.6 percent.

Hindalco Industries topped the selling list, down 3.5 percent. Shares of Tata Motors, Sun Pharma, Maruti Suzuki, ONGC, Bharti Airtel, M&M and Wipro were other prominent losers on Sensex, down 1-2 percent. However, HUL bucked the trend, up 2.1 percent followed by ITC and NTPC with 0.5-0.8 percent upside.

Larsen & Toubro was up 0.44 percent after its construction arm bagged orders worth Rs 2,035 crore in June.

In the broader space, Mahindra CIE Automotive climbed 7 percent. Brokerage Credit Suisse initiated coverage with outperform rating on the stock and set a target price of Rs 262, implying 29 percent potential upside.
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